North American stock markets rebound on higher commodities, mixed earnings

TORONTO – North American stock markets rebounded at midday Wednesday as commodity prices gained some ground and strong earnings from major U.S. companies temporarily overshadow European economic concerns.

The S&P/TSX composite index added 143.2 points to 12,673.9 with all major indices in positive territory. The junior venture exchange rose 20.28 points to 1,828.71.

The Dow Jones industrial average was up 72.5 points to 11,478.4. The S&P 500 was up 10.35 points to 1,203.1. The Nasdaq composite index added 7.25 points to 2,530.7.

Strong U.S. corporate earnings helped investors put aside their misgivings about Europe’s ability to contain its debt problems. Target Corp., Staples Inc. and Dell Inc. all reported earnings for last quarter that were above analysts’ forecasts.

The Canadian dollar was up 0.13 of a cent at 101.95 cents US at midday.

Crude oil prices were up $1.27 to US$87.92 a barrel on the New York Mercantile Exchange after a report on U.S. crude inventories gave ambiguous signs about the strength of consumer demand. On the TSX, the energy index was up 1.2 per cent with shares in Encana Corp. (TSX:ECA) gaining 1.8 per cent or 45 cents to $25.44.

Gold rose $4 to US$1,789 per ounce, while copper prices gained seven cents to $4.06 per pound. The mining sector regained ground lost Tuesday with a 1.4 per cent increase and shares in miner Hudbay Minerals Inc. (TSX:HBM) rose eight cents to $12.20.

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While North American companies have largely been reporting stronger earnings in the most recent quarter, economic growth is weak around the world and some economists worry that a second recession may be coming.

Such divergent data makes traders conflicted about whether to be confident enough to invest and creates stock market havoc. Markets have been particularly volatile since the beginning of the month.

“The biggest worry remains the lack of economic growth in Europe,” said Michael Hewson of CMC Markets.

The leaders of France and Germany said Wednesday that they want the heads of the eurozone countries to elect the president of a new “economic government” who would direct regular summits to respond to the continent’s financial crisis.

“There was no talk about boosting the EFSF (European Financial Stability Facility) and not talk about eurobonds, all rather disappointing but not altogether surprising, given the political obstacles against them,” Hewson said.

The proposal fell short of what markets had hoped for: a grand plan to save the euro and, in particular, a sign the eurozone was moving toward a single bond issued by the 17 countries.

Britain’s FTSE 100 gained 0.17 per cent and Germany’s DAX was 0.22 per cent down. France’s CAC-40 was up 0.93 per cent.

In Canada, Statistics Canada says foreigners reduced their holdings of Canadian securities by about $3.5 billion in June, all of it in debt instruments, reversing a trend of several months. Canadian investment in foreign securities slowed to $343 million in June.

ATS Automation Tooling Systems Inc. (TSX:ATA) swung to a first-quarter loss of $5 million from a profit of $5.2 million a year ago, as it books losses from its discontinued operations. Revenues increased to $126.9 million from $101.8 million. Shares lost 4.07 per cent or 28 cents to $6.60.

Paladin Labs Inc. (TSX:PLB) announced Wednesday that it plans to acquire Labopharm Inc. (TSX:DDS) in a friendly deal that values the fellow Quebec company at more than $20 million. Paladin has agreed to buy all the shares of the Laval-based Labopharm for just over 28.5 cents per share in cash.

Labopharm stock rose 62 per cent, or 10.5 cents to 27.5 cents on the Toronto Stock Exchange.

And U.S. chipmaker Microsemi Corp. (Nasdaq:MSCC) officially launched hostile, US$548.7-million takeover bid for Ottawa-based Zarlink Semiconductor Inc. (TSX:ZL). Zarlink shares rose 7.9 per cent or 26 cents to $3.57.

Shares in Excellon Resources Inc. (TSX:EXN) fell 11 per cent or nine cents to 73 cents each after it said it has halted production at its La Platosa property in Durango, Mexico due to protests that have limited access to the area.

In Asia, Japan’s benchmark Nikkei 225 index sank 0.6 per cent to close at 9,057.26. South Korea’s Kospi rose 0.7 per cent to 1,892.67. The Shanghai Composite Index fell 0.3 per cent to 2,601.26, while Hong Kong’s Hang Seng index rose 0.4 per cent to 20,289.03.